OPPS Site-Neutral Rule Change Allowed by US District Court for 2020

Last Monday, a federal judge denied a request from hospitals to halt the site-neutral provisions in the Outpatient Prospective Payment System (OPPS) for 2020, a rule finalized in September by the Centers for Medicare and Medicaid Services (CMS). Following the original announcement, United States District Court Judge Rosemary Collyer in Washington ruled the Administration exceeded its authority when it expanded site-neutral payment policy to off-campus hospital clinics.

Originally CMS planned to phase in the payment reduction over a period of two years beginning this year. The complaint brought by the American Hospital Association projected substantial cuts of nearly $760 million in 2020. The AHA, along with the Association of American Medical Colleges and almost 40 individual hospitals argued that the Medicare Act did not allow CMS to adjust rates in any way.

Although CMS argued it could develop a method to set payment rates for services, the Court found that the term “method” was not found in the Medicare Act, nor was it defined adequately by the department. When the ruling was delivered in September, Judge Collyer wrote,

nothing in the adjustment or payment scheme permits service-specific, non-budget-neutral cuts.” Only Congress can adjust the budget with increases or cuts.

On Monday, Judge Collyer did not choose to enforce this same order for calendar year 2020, arguing this time that the D.C. Circuit lacked jurisdiction for the case. According to the ruling, the new policy for 2020 is not “precisely the same rule” as the old one. Although favorable to CMS for the moment, the ruling was not issued kindly. Collyer wrote,

CMS had now intentionally placed itself in a position to suffer those same alleged harms, which calls its argument into serious question and appears to set the agency above the law.

Last week, CMS said that it would appeal the 2019 policy decision but would automatically reprocess payments from this year. Following this announcement, eligible providers who had their payments reduced will receive compensation for the full payment owed without the change to the site-neutrality rule. CMS stated,

We do not believe it is appropriate at this time to make a change to the second year of the two-year phase-in of the clinic visit policy.

Plaintiffs remain optimistic; in a statement the AHA reiterated the judge’s remarks and said they,

remain confident that the courts will find the 2020 cuts to be illegal, just as they found the 2019 cuts.

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